It has long been desirable to ensure that innocent people wronged by large corporations can claim for their losses regardless of whether they have the immediate funds.
The Government, via the Lord Chancellor, Mr. Alex Chalk, have indicated their desire to introduce a new law. The result of which will be to make it much easier for members of the public to secure the financial backing of third parties when launching complex claims. These can often be against large well-funded, often international corporations with sizeable budgets. This enables them to instruct large and often intimidating legal teams which they could otherwise ill-afford.
The statement by the Lord Chancellor once enacted will restore the position before the Supreme Court’s ruling in July 2023, where the UK Supreme Court handed down its judgment in R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal and others (2023) UKSC 28. The effect of the PACCAR case in 2023 was that many litigation funding agreements in existence were very likely to be held as unenforceable or at least challengeable or require renegotiation.
The decision placed litigation funders in an uncertain and difficult position. Agreements would need to be renegotiated and they could face the prospect of successful parties seeking to avoid or recover payments made pursuant to their LFA, which made many litigation funding agreements unenforceable.
In PACCAR, an opt-out case in the Competition Appeal Tribunal (CAT), the Supreme Court decided that ALL LITIGATION agreements seeking to take a percentage of the damages were caught by the Damages-Based Agreement Regulations 2013 outside of the CAT.
As a result, most did not comply and were at risk of being unenforceable.
A Government amendment to the Digital Markets, Competition and Consumer Bill currently going through Parliament seeks to limit the PACCAR to CAT proceedings and not all litigation. As a result, cases can continue being funded in the knowledge the government will be introducing a bill to correct the position of the Supreme Court judgment in PACCAR.
Mr. Chalks comments and the Litigation Funding Agreements (Enforceability) Bill help to restore confidence in the sector and facilitate access to justice for many using litigation funding solutions.
Don Macfarlane is a Partner at William Sturges LLP. He has over 2 decades of experience in providing practical, focused advice in all aspects of Company and Commercial Law. To contact Don please call 0207 873 1058
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